GEN COMBO LL MANAGERIAL ACCOUNTING; CONNECT ACCESS CARD
16th Edition
ISBN: 9781260088458
Author: Ray H Garrison
Publisher: McGraw-Hill Education
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Chapter 10, Problem 15P
PROBLEM 10-15 Comprehensive Variance Analysis LO10-1, LO10-2, LO10-3
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
Flexible Budget
Actual
‘Contains direct materials, direct labor, and variable manufacturing
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control? Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following
| Standard Quantity or Hours | Standard Price or Rate | Standard Cost | |
| Direct materials | 3.0 pounds |
$5.00 per pound | $15.00 |
| Direct labor | 0.8 hours |
$16.00 per hour | 12.80 |
| Variable manufacturing overhead | 0.4 hours' |
$3.00 per hour | 1.20 |
| Total standard cost per unit | $29.00 |
'Based on machine-hours.
During June the plant produced 15:000 pools and incurred the following costs:
- Purchased 60:000 pounds of materials at a cost of $4.95 per pound.
- Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
- Worked 11,800 direct labor-hours at a cost of SI7.00 per hour.
- Incurred variable
manufacturing overhead cost totaling S18,290 for the month. A total of 5,900 machine-hours was recorded. It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
- Compute the following variances for June: a Materials price and quantitv variances.
- Labor rate and efficiency variances.
- Variable overhead rate and efficiency variances.
- Summarize the variances that you computed in (1) above by showing the net overall fas orable or unfavorable variance for the month. What impact did this figure have on the company’s income statement9 Show computations.
- Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Dunn possible causes of these variances.
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Problem 10-9 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]
Marvel Parts, Incorporated, manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,075 hours each month to produce 2,150 sets of covers. The standard costs associated with this level of production are:
Total
Per Set of Covers
Direct materials
$ 54,825
$ 25.50
Direct labor
$ 10,750
5.00
Variable manufacturing overhead (based on direct labor-hours)
$ 5,375
2.50
$ 33.00
During August, the factory worked only 800 direct labor-hours and produced 2,500 sets of covers. The following actual costs were recorded during the month:
Total
Per Set of Covers
Direct materials (12,500 yards)
$ 58,750
$ 23.50
Direct labor
$ 13,000
5.20
Variable…
Problem 10-15 (Algo) Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3]
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
Flexible Budget
Actual
Sales (4,000 pools)
$ 239,000
$ 239,000
Variable expenses:
Variable cost of goods sold*
57,680
70,390
Variable selling expenses
16,000
16,000
Total variable expenses
73,680
86,390
Contribution margin
165,320
152,610
Fixed expenses:
Manufacturing overhead
72,000
72,000
Selling and administrative
82,000
82,000
Total fixed expenses
154,000
154,000
Net operating income (loss)
$ 11,320
$ (1,390)
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn…
Problem 10-19 Activity and Spending Variances [LO10-1, LO10-2, LO10-3]
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.
After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:
Cost Formula
Actual Cost in March
Utilities
$16,800 plus $0.15 per machine-hour
$
21,300
Maintenance
$38,500 plus $2.00 per machine-hour
$
68,300
Supplies
$0.60 per machine-hour
$
10,600
Indirect labor
$94,200 plus $1.30 per machine-hour
$
118,500
Depreciation
$68,100
$
69,800
During March, the company worked 16,000…
Chapter 10 Solutions
GEN COMBO LL MANAGERIAL ACCOUNTING; CONNECT ACCESS CARD
Ch. 10.A - EXERCISE 10A-1 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A-2 Predetermined Overhead Rate;...Ch. 10.A - Prob. 3ECh. 10.A - EXERCISE 10A-4 Fixed Overhead Variances LO10-4...Ch. 10.A - EXERCISE 10A5 Using Fixed Overhead Variances LO104...Ch. 10.A - EXERCISE 10A-6 Predetermined Overhead Rate LO10-4...Ch. 10.A - EXERCISE 10A-7 Relations Among Fixed Overhead...Ch. 10.A - Prob. 8PCh. 10.A - PROBLEM 10A-9 Applying Overhead; Overhead...Ch. 10.A - PROBLEM 10A-10 Comprehensive Standard Cost...
Ch. 10.A -
PROBLEM 10A-11 Comprehensive Standard Cost...Ch. 10.A - Prob. 12PCh. 10.B - EXERCISE 10B-1 Standard Cost Flows; Income...Ch. 10.B - Prob. 2ECh. 10.B - Prob. 3ECh. 10.B - Prob. 4ECh. 10.B - Prob. 5PCh. 10.B - Prob. 6PCh. 10 - Prob. 1QCh. 10 - Why are separate price and quantity variances...Ch. 10 - 10-3 Who is generally responsible for the...Ch. 10 - The materials price variance can be computed at...Ch. 10 - 10-5 If the materials price variance is favorable...Ch. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - 10-8 What effect, if any, would you expect...Ch. 10 - 10-9 If variable manufacturing overhead is applied...Ch. 10 - 10-10 Why can undue emphasis on labor efficiency...Ch. 10 -
The Excel worksheet form that appears below is to...Ch. 10 - Prob. 2AECh. 10 - Prob. 1F15Ch. 10 - Prob. 2F15Ch. 10 - Prob. 3F15Ch. 10 - Prob. 4F15Ch. 10 - Prob. 5F15Ch. 10 - Prob. 6F15Ch. 10 - Prob. 7F15Ch. 10 - Prob. 8F15Ch. 10 - Prob. 9F15Ch. 10 - Preble Company manufactures one product. Its...Ch. 10 - Prob. 11F15Ch. 10 - Prob. 12F15Ch. 10 - Prob. 13F15Ch. 10 - Prob. 14F15Ch. 10 - Prob. 15F15Ch. 10 - EXERCISE 10-1 Direct Materials Variances LO10-1...Ch. 10 -
EXERCISE 10-2 Direct Labor Variances...Ch. 10 -
EXERCISE 10–3 Variable Overhead Variances...Ch. 10 - EXERCISE 10-4 Direct Labor and Variable...Ch. 10 -
EXERCISE 10-5 Working Backwards from Labor...Ch. 10 - EXERCISE 10-6 Direct Materials and Direct Labor...Ch. 10 - EXERCISE 10-7 Direct Materials Variances LOIO-1...Ch. 10 -
EXERCISE 10-8 Direct Materials and Direct Labor...Ch. 10 -
PROBLEM 10-9 Comprehensive Variance Analysis...Ch. 10 -
PROBLEM 10-10 Multiple Products, Materials, and...Ch. 10 - PROBLEM 10-11 Direct Materials and Direct Labor...Ch. 10 - PROBLEM 10-12 Variance Analysis in a...Ch. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - PROBLEM 10-15 Comprehensive Variance Analysis...Ch. 10 - Prob. 16PCh. 10 - Prob. 17C
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